For an entrepreneur, hiring a CXO can be an exhaustive task, albeit one that if done right, can be deeply rewarding, and in the same breath one small mistake while recruiting can be extremely detrimental to the business.
Because the entrepreneur’s view and vision of their business in unique, hiring the right leaders becomes an entirely “strategic” necessity, which unfortunately given the entrepreneur’s paucity of time is often reduced to a transaction with very limiting outcomes.
Entrepreneurial firms need to take a divergent route to hire the right fit for their business and work culture. They not only need to assess thoroughly for potential but also for the ability of the candidate to fit into an environment which is dynamic, where decisions need to be taken on the fly and the candidate’s ability to work with ambiguity. Another interesting observation is that entrepreneurial firms don't want to invest the time and money that is required to hire the right leader.
It’s a classic Catch-22" situation – “I want my business to grow, and I want the right leaders to help me grow the business. However I cannot incur the cost/time associated with the hiring, and the business paradigm challenging that is that the right leader can help you grow your revenue exponentially”.
The old adage “penny wise and pound foolish” is so apt, because several incredibly conclusive studies also show that the cost of a wrong hire on business can be more than - 5X of the revenue.
I firmly believe that the captain steering an entrepreneurial ship needs an entirely different set of skills than those at the helm of a more established business.
Here are 7 ‘stellar’ tips to help you navigate your next CEO/CXO hire:
1. Choose Potential over Pedigree:
A utopian hiring is one where the candidate hired has an excellent pedigree and tremendous potential. But that is utopia, and not always reality.
For Entrepreneur led businesses, it's imperative to choose potential over pedigree. For start-ups, this is particularly the case, “leadership potential trumps experience”. Businesses need people who have the zeal to learn new skills, flexibility to adapt and the courage to persevere in the face of ambiguity and failure rather than experienced candidates who perform well, but have absolutely no desire to learn or change. I personally believe this is an area where the right recruitment partner can make all the difference. Choose an entrepreneurial firm to partner with, and the difference is evident in the outcome.
2. Focus on authenticity and maturity:
Take measure of the candidate’s authenticity and maturity. Most CXOs are seasoned interviewers and can easily impress with ‘just the right answer’. How does one assess authenticity and separate the wheat from the chaff? Again, the right HR Head or the right Executive Search partner can add tremendous value. We use several techniques, assessment tools and tests to find the best fit.
While hiring can be open in your search and interactions, CXO hiring’s often get derailed due to inbuilt biases for candidates with a substantial same industry experience. Candidates with the right set of competencies irrespective of industry experience are often the ones that create greater value. They bring to the table a fresh outlook, many times a new perspective on an old problem. Willingness to adapt ensures survival and proliferation of the fittest. Charles Darwin’s theory holds true for organizations too.
4. Zoom Out with an External Perspective:
It is a good idea to involve your board or external advisors when hiring for senior positions. An outsider’s perspective adds diversity and color into the hiring, often challenging thoughts and ideas that an entrepreneur could have overlooked in his zealousness to hire.
5. Vision drives the process:
When we marry, we look at the long term. We see ourselves getting old with our partner. CXO hiring is akin to marriage. It’s a decision that affects all other decisions and will determine the course of your business in the long term. It should not be a ‘here and now’ decision. It needs to be completely aligned to the entrepreneur’s long-term vision.
6. Hiring is a Science, but Retention is an Art:
In retrospect, hiring is just the first hurdle crossed. Retention, of course, is a marathon run. As much as hiring deserves the full attention of an Entrepreneur, retaining the right individual is a bigger challenge. I recall an incident when after considerable time and effort our client, a billion dollar entrepreneurial company hired a CEO. One year into the role the candidate quit. The client’s feedback was “he doesn’t live up to our expectations”. Over a cup of coffee the candidate told us that the Entrepreneur had not met him more than three times in the last nine months, so understanding expectations needed crystal ball gazing. A great company, a fantastic hire and a situation easily avoidable if both parties had spent time communicating more.
Entrepreneurs need to have well-defined & documented KRAs for CXOs and a robust, seamless mechanism of communication and review. Correct and timely communication is the key to retention.
7. Focus on candidate’s professional needs
Lastly, it's always a smart idea to do a reverse evaluation. As you assess the candidate’s fit into your company, do take time out to check reverse fit also. Review your candidate’s career path to predict what would appeal to him/her as the next great challenge with reference to his/her professional strengths and skills. A right fit between a personal growth plan and organizational growth plan can point to your next Dragon Warrior!